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Quality of Earnings was so much of an important book for me that I X'roxed every page and put it in a custom binder (many, many years ago). The book and its concepts were revolutionary at the time, and O'Glove's writing style is both clear and easy to understand, an achievement with most investment books. As far as the dividend chapter is concerned, you appear to be seeing what you want to see, as my copy says:

I do not necessarily believe dividends are an evil unto themselves; certainly they have a role to play in rewarding shareholders. But managements should reflect that their first goal is to develop the enterprises for which they work, and paying dividends when the business is short of capital is foolish. So is increasing payouts when the money might be used to repurchase shares.

The bottom line here is that investors must keep an eye on on dividend policy, and consider that for most industrial concerns, regular boosts in the face of irregular earnings can be a warning signal.

Plus, this has to be placed in context, as options were not yet the beast they became, buybacks were used by companies in a mostly logical manner, and dividends increases were a regular event for many companies (before the tax policy change made dividend increases even more logical.

Bottom line - Quality of Earnigns was for me one of the five or ten more important books I've ever read as an investor.
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